Entire Section

  • CIR 12A.3 CIR 12A.3 Custody of Fund Property

    • CIR 12A.3.1 CIR 12A.3.1

      (1) For the purposes of Article 27(1)(e) of the Law, the Fund Manager of a Qualified Investor Fund that is not an Investment Trust must ensure that the legal title to Fund Property is registered with an Eligible Custodian.
      (2) The requirement in Article 27(1)(e) of the Law does not apply to the Fund Manager of a Qualified Investor Fund if it is:
      (a) a Property Fund;
      (b) a Private Equity Fund;
      (c) a Venture Capital Fund; or
      (d) a Fund in so far as it is investing in an interest in the operation of a Real Property asset (such as investment in an infrastructure project).
      (3) If the Fund Manager of a Qualified Investor Fund referred to in (2) itself holds Fund Property of any kind or if it uses a Fund Platform and the Incorporated Cell Company holds Fund Property of any kind, it must have in place effective arrangements which ensure that the Fund Property is not available to creditors in the event of the insolvency of the Fund Manager or the Incorporated Cell Company (as the case may be).
      [Added] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
      [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
      [Amended] DFSA RMI248/2019 (Made 18th December 2019) [VER26/12-19].
      [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]

      • CIR 12A.3.1 Guidance

        1. Article 27(1)(e) of the Law requires a Domestic Fund that is not an Investment Trust to have legal title to the Fund Property registered with an eligible person (unless the Rules provide otherwise). CIR Rule 12A.3.1(1) specifies that the person must be an Eligible Custodian. CIR Rule 12A.3.1(2) disapplies the requirement in relation to Fund Property of certain kinds of Qualified Investor Funds. Regardless of who holds title to Fund Property, the Fund Manager must always ensure that, in accordance with Article 22(2)(f) of the Law, Fund Property is clearly identified as such and held separately from property of the Fund Manager and any other Funds. Where Fund Property consists of cash or liquid assets, the assets must also be held under arrangements that clearly identify them as belonging to the Fund, and must be properly segregated from similar assets belonging to the Fund Manager and any other Funds.
        2. Where a Fund invests in infrastructure projects (for example, the development of public facilities such as roads, railways or bridges), the Fund Manager may hold self-custody of the Fund Property which consists of the interest in the infrastructure project. However, where it does so, the Fund Manager is not exempt from the overarching obligation under CIR 8.2.2(1) to Unitholders of the QIF to ensure safe custody of the Fund Property. This envisages proper identification and segregation of the interest in the infrastructure project as Fund Property of the QIF.
        [Added] DFSA RM137/2014 (Made 21st August 2014). [VER17/06-14]
        [Amended] DFSA RM218/2018 (Made 22nd February 2018) [VER23/12-18]
        [Amended] DFSA RMI279/2020 (Made 28th October 2020). [VER29/11-20]